Back in the 1970s – when the word “computer” meant “mainframe” – most industry experts scoffed at the idea of the personal computer edging out mainframes. PCs were so much less powerful! They couldn’t do anything a real computer could do! Within a decade, however, PCs were dominant – they may not have been more powerful but their size, cost, and flexibility proved to be more important to sales. This is a commonly-cited example of “disruption” – the makers of mainframes were right about their product’s superiority but failed to appreciate the ways in which their superiority didn’t matter.
Many now think that this classic tale is repeating itself as the PC industry is being disrupted by phones and tablets. Recent IDC released a report showing that first-quarter PC sales showed a whopping 14% decline over last year. This is especially alarming news for PC makers since Windows 8 was expected to be the savior of the PC industry – normally in years where a new version of Windows is released, PC sales see a nice bump.
Some are even blaming Windows 8 for the drop. IDC analyst Bob O’Donnell said, “At this point, unfortunately, it seems clear that the Windows 8 launch not only failed to provide a positive boost to the PC market, but appears to have slowed the market.” Analysts have cited the changes to the Windows user experience as being turn-offs for consumers. This hypothesis is partially undermined by the fact that Apple is selling fewer desktops and laptops as well.
The real story comes from smartphones and tablets. Smartphones are already selling at twice the rate that PC are – according to IDC there were over 600 million shipped last year. More and more people use smartphones at the intersection of their work and personal lives – email, calendaring, photos, music, and apps. Consumers generally replace their phones on a two-year cycle based on their service rate plan, which means that people are getting their hands on better and better phones while laptops are largely the same as they were a few years ago.
Tablets are also growing at a faster and faster pace. For many people, tablets do everything they need a PC to do with more convenience. They are mobile, have instant on/off, longer battery life, comparable or better price points, and have deep app stores providing customized application functionality optimized for the tablet form factor. They are also perfect for a number of work applications for professions ranging from nurses to airline pilots. And who could raise a toddler without one? This market is critical enough to lure in new players like Amazon and cause Microsoft to bypass their usual OEM partner channel to introduce their own device.
Perhaps the consumer reaction to Windows 8 may have impacted quarterly results, but in my opinion this misses the real story – which is a classic “disruption” tale of a new class of products edging out an existing class despite being inferior in some ways. Sure, PCs aren’t going anywhere – many people and businesses will continue to use them for decades to come. But remember – there are people still using mainframes too.